Not Happy With Your 2025 Social Security COLA? Here's Some Bad News.

Key Points

• Many people were disappointed when Social Security benefits only rose 2.5% at the start of the year.

• So far, next year's Social Security cost-of-living adjustment (COLA) does not look to be much higher.

• There's still a chance of a better raise in 2026, but it's apt to come at a cost.

• The $23,760 Social Security bonus most retirees completely overlook ›

The cost of living has a stubborn way of rising over time. Sometimes, those increases are subtle. In recent years, though, inflation has been more pronounced.

The trouble began in 2021, when Americans found themselves flush with cash from stimulus policies at a time when supply chains were experiencing pandemic-induced interruptions. That disconnect between supply and demand fueled a period of rampant inflation that left many working Americans and retirees alike scrambling to keep up.

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More recently, inflation has cooled. But while that's been a good thing in the context of paying for goods and services, it's been a less good thing in the context of Social Security.

Because Social Security's cost-of-living adjustments (COLAs) are tied directly to inflation, a slowdown in that regard left seniors with a mere 2.5% increase to their monthly benefits at the start of 2025. Not surprisingly, many retirees weren't happy with that COLA, calling it insufficient. But if you felt similarly about your 2025 COLA, there's unfortunately some potential bad news ahead.

Social Security's 2026 COLA could be a virtual repeat of 2025's

While it's too early in the year to say with certainty what 2026's Social Security COLA will amount to, there are some projections out there based on the inflation data we have so far. In June, The Senior Citizens League, an advocacy group, estimated 2026's Social Security COLA at 2.5%. It has since upped its projection to 2.6% based on more recent inflation readings.

But either way, if these two recent estimates are in the ballpark of what ends up being the actual COLA number, it's going to leave many seniors in the lurch. As it is, many retirees are struggling to keep up with their living costs. It almost doesn't matter whether next year's COLA is 2.5% versus 2.6% -- seniors are unlikely to gain much buying power either way.

A more generous COLA won't even solve the problem

Of course, if inflation continues to tick upward in the coming months, seniors on Social Security could end up with a much larger COLA on their hands. But that's not necessarily a good thing, either.

A more generous COLA means that living costs are rising quickly once again, straining seniors' budgets and forcing many to make hard choices on how they spend their money. In fact, the only way for retirees to really get ahead financially in the context of inflation is to have separate savings or investments -- ideally, investments that generate enough income to outpace the rate of inflation.

Now it's not exactly easy to build retirement savings once you're already in retirement. But if you missed that boat, there may be a fairly reasonable solution -- go back to work.

It doesn't have to be a full-time job or even a steady part-time job, either. Joining the gig economy is a good way to generate income and carve out more buying power. And if you play your cards right, you may even be able to earn money doing something you love, whether it's playing in a band, designing furniture, selling artwork, or caring for people's pets while they go on vacation.

The Social Security Administration plans to announce 2026's COLA in October, so until then, any number you see is only a guess. But if you weren't thrilled with this year's COLA, you should prepare for next year's number not to be too far off. The sooner you come to terms with that, the sooner you can start taking other steps to improve your financial situation.

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